Mr. Speaker, this Assembly inherited an unsustainable fiscal situation. Projections before our first budget showed that unless we took action, the GNWT would start running operating deficits in 2018-19. To cover deficits, we need to borrow, and this in turn adds to our net debt.
To get our fiscal house in order, we started to make the difficult decisions in last year’s budget to reduce spending and re-profile our funds to meet the mandate and priorities of the 18th Assembly. Budget 2017-18 is part of a multi-year plan to return the GNWT to fiscal sustainability.
We are projecting to spend $1.7 billion to deliver government programs and services in 2017-18 and we have approved a capital budget of $266 million for this year. It is important to remember that both our operating expenses and capital investments need to be paid with our $1.9 billion in revenues.
As we have committed to in our Fiscal Responsibility Policy, we have managed to keep operating expenditures below revenues for the last seven years. However, over the same seven years and further into the past, we have borrowed to invest in infrastructure and other capital investments. As a consequence, every year we have needed to borrow more and our debt continues to rise. In particular, our short-term debt is expected to grow to $320 million by the end of 2016-17. This Assembly is left with a choice: we either start paying this back to restore fiscal sustainability or expose the GNWT to serious cuts in capital investment and operating expenditures because we would be out of other options.
Our fiscal strategy is simple. We have to reduce the amount we spend on programs and services to ensure we are able to deliver our core programs and services and pay for our on-going infrastructure needs, without adding to our short-term debt. We need to carefully manage the growth in our operating and maintenance budget to ensure it doesn't exceed the growth in our revenues. We have to reduce our reliance on short-term borrowing to finance our operations. Or, put even more simply, we shouldn't spend what we don't have.
Our fiscal strategy is working despite a flat revenue forecast over the medium term. We are reducing and re-profiling expenditures and increasing revenues where we can without compromising our delivery of essential programs and services. These are difficult decisions to make as we need to balance service delivery and infrastructure investment in all regions of the Northwest Territories with our mandate and the fiscal realities that we face.
This budget includes $27 million in expenditure reductions, building on the efforts outlined in the 2016-17 budget. In total, we have identified approximately $100 million in expenditure reduction and revenue initiatives when fully implemented during the life of the 18th Legislative Assembly. By staying the course with our fiscal strategy and implementing the actions we have identified, we will start to lower our debt levels in the next three years, while still allowing us to deliver on promises made in the 18th Assembly's mandate.